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Tesla and SolarCity Partner to Provide Energy Storage for Commercial Buildings

RP Siegel | Monday December 16th, 2013 | 4 Comments

SolarCity TeslaIt looks like Elon Musk and his friends at Solar City are at it again. First, there was the Tesla electric car. Then came solar energy provider Solar City. Then came the financial innovation of bonds backed by solar power. Now they appear to be combining all of these, with Solar City offering commercial energy storage systems based on batteries produced by Tesla Motors.

The batteries, which are “about the size of a small refrigerator,” were originally developed to store solar energy during periods of cloud cover or darkness, which, of course, they certainly can do.

But the leaders at SolarCity saw another, perhaps larger opportunity—providing short term storage for buildings to reduce their peak power demands at the time of day when power is most expensive. People in the industry call this “load leveling,” and it not only benefits customers, but it benefits the utility and the environment as well by reducing the need for inefficient and dirty “peaker plants” that are often used to fill in supply gaps during the busiest times of the day.

SolarCity’s new system is called DemandLogic and it combines the battery capacity with a solar array and software that responds to the change in both rates and demand charges throughout the day for commercial customers, balancing those with the array’s production and the building’s demand for power.SolarCity_Walmart_Buckeye

Lyndon Rive, SolarCity’s chief executive, says that the systems would also provide backup power and a working solar array during utility outages. The vision of this system is not to provide independence from the grid, though it would help to maintaining grid stability as more customers move into solar.

Even though the system, which uses the same lithium-ion battery technology that is used in Tesla vehicles, is aimed at commercial customers, roughly 300 residential customers have signed up for a pilot program. Tesla CEO, Elon Musk is the chairman of SolarCity and is also Mr. Rive’s cousin.

The pilot program will be conducted in parts of California, Connecticut and Massachusetts, markets with particularly high demand charges. Solar systems themselves are inherently well-suited to peak demand operation, since they put out the most power when the sun is hot, which is also the time that air conditioning demand is highest. Demand charges are added to compensate utilities for the capital investment required to provide the additional capacity they require to meet that demand.

However, Sam Jaffe, a senior research analyst at Navigant Research, is skeptical. “It’s not a no-brainer,” he said.  You still have to have the exact right combination of rates and demand charges and the cost of that equipment.”

The SolarCity systems, which are designed to be eligible for a 30 percent federal tax credit, will be available to new solar customers signing 10-year service agreements. The systems are made to store about a third of the energy the solar array can produce. At peak times, the system should be able to deliver both incoming solar power in addition to previously stored power. SolarCity will guarantee the demand charge reductions, which are expected to run around 20 percent.

Many companies currently participate in demand response programs, where they voluntarily reduce consumption during periods of peak demand. Systems like this one will allow companies to operate at full capacity during peak times, without incurring exorbitant charges.

Prices have not yet been disclosed, though they are expected to be in the $1000/kW range. That means, that, at least initially, they will only be attractive for businesses in areas with high peak demand charges.

Image courtesy of SolarCity

RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining romp that is currently being adapted for the big screen. Now available on Kindle.

Follow RP Siegel on Twitter.


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  • http://listenup2005.spaces.live.com/default.aspx nltldoc

    “You still have to have the exact right combination of rates and demand charges and the cost of that equipment.” — blah blah blah

    How is this any different than a System without the Solar Component….seems like a Nay$ayer from Big Oil/Coal.
    Change for the Common Good is always having to confront the predatory capitalists.

    • kweiss

      You can surely participate in demand response without the Solar component but the essence of this article is using the solar system as an asset in demand response. This is a capitalist idea nltldoc. You could remove a substantial load from the grid in times of demand response and potentially still operate your facility at full load thinks to the solar system. In demand response, curtailing load from the grid offers a nice incentive from the utility. By having a solar system to operate in times of demand response, you can curtail a greater load which equals more capital in demand response. This is capitalism in essence, nltldoc.

  • earlrichards

    To avoid the gasoline price rip-off, plug Tesla S electric car into your household, solar array.

  • Bala R. Subramanian

    Elon Musk and his cousin Rive, will be better-off building a solar-power grid as a consumer co-operative in partnership with the equatorial countries including the middle-east. Such a smart-power-grid can also carry data and form the basis for a next generation internet that could make sustainability the prime focus and pave the way for the internet-of-everything and usher in humanity 2.0 that could have unlimited affordable energy for the entire global-citizenry leading to the abundance of everything (water included) and gradual elimination of the national borders along with the elimination of weapons making industries and cultures.